Schwab names wealth advice a growth area as advisory net flows rise 55%

Charles Schwab named wealth advice a growth area on its third-quarter earnings call Thursday after Schwab Wealth Advisory net flows rose 55% year over year.

Managed investing net flows reached a record $24 billion in the quarter, up 22% from a year earlier, CEO Rick Wurster said on the earnings call. "Client demand for advice is accelerating," he said, citing a client promoter score of 84 for the wealth advisory business.

Schwab told investors its wealth advice division holds about 2% of a $37 trillion advice market, or roughly $740 billion. It also said 37% of current clients report a "willingness to pay" for advice.

The investor presentation listed the spending areas: wealth hubs and branches, discretionary portfolios, expanded tax, trust and estate offerings, and "AI-powered planning."

Wurster said Schwab is working on a proprietary long-short investment strategy and will update investors soon, without giving timing. Schwab and Fidelity Investments have recently limited the use of long-short strategies to manage high demand.

Wurster said Schwab would be able to run such a product efficiently "from a balance sheet and operational standpoint," which he said would help the firm sustain its ability to deliver long-short capabilities to clients.

Wurster also said Schwab was the first RIA custodian included in Claude for Financial Advisors, an Anthropic tool that offers notetaking assistance, alternative investment briefings, compliance and policy reviews, and estate and tax briefings.